Apple is reportedly seeking multiyear contracts to lock up its supply of cobalt, an essential ingredient in lithium-ion batteries for smartphones and electric vehicles. The challenge is that with the growth of electric and hybrid vehicles gobbling ever larger amounts of the metal, Cupertino fears a shortage that could hurt its sales figures.
It can be recalled that in March 2017, Apple announced that it would stop buying hand-mined cobalt in the Congo following reports of child labor and risky work conditions. About a quarter of total cobalt production is used by the smartphone companies to manufacture the batteries, according to Bloomberg. The talks began over a year ago but it's not certain that Apple will take a deal in the end. An electric auto battery uses one thousand times more refined cobalt than a smartphone does, therefore meaning that it's actually the automobile industry which is taking up cobalt supplies.
But due to the exponentially growing demand for the metal, prices per metric ton of cobalt have more than increased threefold from between September 2016 and January 2018 to more than $70,000.More news: Russian Federation urges U.S. not to play with fire in Syria
That's caused the companies that rely on cobalt the most to go directly to the miners and sign contracts to ensure future supplies, while also locking in a price to hedge against future price increases. BMW is also close to securing a 10-year supply deal with an unnamed supplier in February.
The Bloomberg report said Apple was not immediately available for comment outside regular business hours. And yet, cobalt prices have tripled over the past 18 months.
The cobalt Apple uses at the moment comes from Congo and it does get a lost of criticism because the labour used in such mines suffer from appalling conditions and use child labour.More news: Jackson Local Schools in OH on lockdown after student shoots himself
The DRC is the richest source of cobalt but smaller deposits are also found in countries ranging from Finland to Canada.
One issue with the cobalt supply is proportion.
Rights group Amnesty International said past year about a fifth of Congo's cobalt production is mined by hand by informal miners including children, often in unsafe conditions.More news: American Airlines employee saves two teenage girls from possible human trafficking plot
In recent years, Apple has stepped up its engagement with cobalt suppliers after the origin of the metal in its supply chain came under scrutiny from human rights groups.
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